HYPERION ECONOMIC JOURNAL

Hyperion University of Bucharest
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HYPERION ECONOMIC JOURNAL

April 2026
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The Evaluation of Financial Performance as a Prevention Mechanism and Predictive Instrument of Bankruptcy Risk

Keywords: financial performance , financial distress , bankruptcy , financial indicators , Composite score , Altman Z’-Score

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Authors:
  • Valerica TĂTĂRANU (SOARE), PhD Student, Affiliation: IOSUD – Doctoral School of Economic Sciences and Humanities, Valahia University of Targoviște, Targoviste, Romania;
  • Constantin Aurelian IONESCU, PhD., Associate Professor, Affiliation: Faculty of Economics, Valahia University of Targoviște, Targoviste, Romania, Faculty of Economics, Hyperion University of Bucharest, Bucharest, Romania;
  • Florin RADU, PhD., Associate Professor, Affiliation: Faculty of Economics, Valahia University of Targoviște, Targoviste, Romania;
  • Elena TOADER (VASILE), PhD Student, Affiliation: IOSUD – Doctoral School of Economic Sciences and Humanities, Valahia University of Targoviște, Targoviste, Romania;
  • Andreea Nicoleta LIȚĂ (MATEI), PhD Student, Affiliation: IOSUD – Doctoral School of Economic Sciences and Humanities, Valahia University of Targoviște, Targoviste, Romania;
Pages: 85 : 103
Abstract: In an economic environment marked by volatility and uncertainty, financial performance is a fundamental element in assessing the stability and sustainability of organisations. The early detection of financial vulnerabilities requires integrating financial performance into a predictive framework, where changes in factors such as profitability, liquidity, and financial leverage can signal an increased probability of significant difficulties. Consequently, financial performance becomes not only a reflection of past outcomes but also a prevention mechanism and a predictive instrument that aids decision-makers in implementing timely corrective actions. This study aims to analyse the role of financial performance assessment as a prevention mechanism and predictive instrument for bankruptcy risk by identifying and testing the predictive capacity of key financial indicators. This research highlights how financial performance can contribute to the development of effective early warning systems, which can support organisations ' risk management and strengthen their long-term sustainability.
JEL classification: M41

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M41

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